The SitePoint Forums have moved.

You can now find them here.
This forum is now closed to new posts, but you can browse existing content.
You can find out more information about the move and how to open a new account (if necessary) here.
If you get stuck you can get support by emailing forums@sitepoint.com

If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.

A question on contracts

I started looking into a particular merchant provider for a merchant account to be used for purchases related to a online store that I am setting up. So I won't need to take cards in person and won't need an actual credit card terminal. I talked with a re-seller over the phone and agreed to sigh up for $49.95 a month.

The re-seller wanted $39.95 to get thing rolling which I agreed to and put on a business credit card. There was no talk of a contract or any minimum period of time.

Then I get a packet of forms in the mail to sign that would bind me to a contract for 48 months. This is a lease agreement that seems to not be cancelable during the period of the lease by me.

I sent the dude an email basically stating that "I looked over the terms of the contract and decided to look into other possibilities. So I have decided not to move ahead with xyz company at this time."

Then he sends me this email

"Please, before you sign up with anyone else, realize that you have a contract with us, and the cancellation fee is a combination of the fees xyz company would have earned, plus $75.00. You may cancel this contract, but you'll have to pay the $10.00 CS, $20 hosting and gateway times the contract length, + $75.00."

I have not signed any contracts or sent in any forms.

I got another packet in the mail that says my total monthly fees are $55.00 a month with a $75 cancellation fee.

Well to be blunt he's trying to rip you off. If you did not sign anything you are not liable for any cancellation fees unless you agreed to them online in some way. (but even if you did it's nearly impossible to prove).

If he won't give your money back just call your credit card company and explain the situation to them... and dispute the charges.

If he never told you of the fees in any way there is no verbal contract. He's just trying to pull one over on you. Unless you signed that contract and sent it to him, you have no legal agreement with him yet. Just tell him to give you your money back or you'll call your credit card company and an attorney.

Brandon is right. Those leasing agreements is where the agents make a bundle. This sounds like the same company that one other person had a problem with. If you have an online merchant account - there should be no type of lease what-so-ever. You do not need any equipment. There are some software packages that you might require depending on your circumstances but that is minute.

This xyz company is definetly trying to pull a fast one on you. As Corey mentioned, there should not be a lease unless you are purchasing specific software. The only ongoing expense you should have is a monthly gateway fee, statement fee, and applicable processing fee's.

There are companies that offer an open contract that has no set term and does not carry any type of early termination fee.

You may want to consult a legal proffesional over this, I was in a similar situation but I was on the other end of it. Basically I agreed to help a bloke out with his website, during the process he said he had come into some money and that he would pay me £500 (aboout $1000) to finish the job before the end of the month(january). This offer was made in an email, i returned an email saying thats great I will get it done and i did. At the end of the month he said he didnt like what i had done, and he went with a "mate" who even today hasnt got half the functionality that my site had, and it uses the same design (we used a 3rd party designer), and he has to update it manually not through the simple CMS i provided. To be short I was shafted by him and his mate, a lot of work for nothing.
Anyway a legal eagle who works with me occasionnally recently pointed out, that the contract although only in emails was valid and he owed me the money because i fulfilled my end of the deal. Both parties have to have proof, I had emails, your friend may have telephone recordings.

So what I am saying is that it is possible there is some sort of contract, you do not have to sign something. A common mistake. But also an open field which people can exploit. BUT you also have by law a 20 day cooling off period in which to cancel or change your mind and you need no reason, so you should be covered under this.

This is UK law and open to some debate, so may be different where you are. But my thoughts are
This bloke is definitely trying to screw you.
This bloke *may* have some sort of contract
You have a cooling off period which overides the above.

I would just get a 20 minute consultation with a legal rep and find out what the laws are at your end, better to know all the facts in case he gets uppity which is sounds like he is. You have sent him an email saying you want out, i would keep that email and all his replys.

That guy is definitely trying to scam you. If you signed no merchant agreement or lease agreement, he has no legal grounds to try to force you into abiding by a contract that you never agreed to in the first place. He seems to be trying to "bully you" into paying these fees.

In fact, in more for most leasing companies to fund a lease, they require a verbal authorization/confirmation call over the phone as well as a fully executed lease agreement.

Furthermore, in my opinion - a 48 month "lease" on an e-commerce system is outrageous in this day and age. Terminal leases are one thing and even high ticket software but for a gateway system, there is no need to tie yourself down for four years into a non-cancellable lease.

Frankly, I'm an advocate of merchant accounts without any cancellation fees or early termination fees either. If a company is confident about the level of service they deliver, they shouldn't need to "force" a merchant to stay with them. So this is always something to ask about and get a written response on as well.

The next time you speak with this guy, tell him that you are extremely upset and that you want to know what ISO/MSP and Member Bank he represents and that you will be happy to take this matter up with them if he doesn't issue you a refund immediately and drop the matter completely. That might get his attention.